He thinks to himself, is notin the pipe butthe slender breath of the piper.

These lines relate back to line 1 in that both emphasize freedom. “Not / in the pipe” means that whatever constrained situation a person might be in — in this case an elevator man whose potential obviously exceeds his occupation — is less important than the “breath of the piper,” what the individual personality does with those limited circumstances. Throughout the poem, it’s clear that the elevator man has done much more than just transport people from floor to floor. It’s the subtle actions he performs — kindnesses, revenges — that make his experience that much more interesting.

The metaphor is of playing music on a pipe (letting out all the “stops” like organ stops, up and down the musical scale).